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India's call center outsourcingmarket is growing fast, attracting both local outsourcers and multinational services companies, according to a study by Gartner.

The BPO market in India was worth US$1.14 billion in 2010, up by 28.6 percent from the previous year, the research firm said. The fastest adopters of BPO in India are in deregulated industries, Gartner research director T.J. Singh said on Tuesday. Telecommunications operators, for example, invested in areas like customer care in a competitive market, he said.

India has already overtaken China as a BPO market and is likely to stay ahead in 2014 when its domestic BPO market is forecast to grow to $2.47 billion. The Chinese BPO market in contrast is forecast to grow to $1.6 billion by 2014. Australia and Japan are still ahead of India in the Asia Pacific region, Singh said.

India is known for its large facilities set up by Indian and foreign companies to deliver BPO services to customers in the U.S. and Europe. To target the Indian market, call service centers will have to adopt cost and revenue models that are different from the ones that they use elsewhere, said Siddharth Pai, a partner at TPI, a sourcing data and advisory firm.

Indian outsourcers such as Wipro, Infosys Technologies (INFY), and Tata Consultancy Services, who have built their businesses around delivering IT and BPO services to customers in the U.S. and Europe, are increasingly focusing on India as a market. Their Indian revenue is however still a lot smaller than their revenue from the U.S. or Europe.

Inbound call centers providers who were focusing solely on the international market realized that there was opportunity in the Indian BPO market, which grew rapidly even during the global economic crisis, Singh said.

Multinational companies, aided sometimes by local acquisitions, are also focusing on India as a market for both IT and BPO services.

Companies such as IBM (IBM) are dominant in the Indian IT services market because they focused on the Indian market ahead of their Indian competitors, Pai said. The BPO market in India however has local players like Aegis and Hinduja TMT that have addressed the Indian market for a long time, he added.

One of the reasons large Indian outsourcers avoided the Indian market in the past is that they could earn more revenue from contracts in the U.S. and Europe.

The domestic market pays less but outsourcers can protect their margins by higher utilization of staff and infrastructure, higher volumes, and by use of automation technologies such as IVR (interactive voice response), Singh said.